JKHY - Earnings call transcript Q3 2024 | Jack Henry & Associates, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Jack Henry Third Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded. I would now like to turn the conference over to Vance Sherard, Vice President, Investor Relations. Please go ahead.

Vance Sherard

Thank you, Alan. you XXXX us Earnings thank Henry the and Quarter Third Call. morning, for for joining Jack Good

our Joining me Treasurer; on I for Board President Chair the COO. After will call today CEO; and over Carsley, is AI turn Mimi on comments Greg the success the CFO discuss other recent to opening and my our and for will survey, metrics Dave recent on and After his call Adelson, and industry. business strategic Greg multiple remarks, David initiatives. key solutions, strategic plus our comments, concludes Dave focus benchmark Foss, his

Mimi Jack the financial press the website. Henry will Relations available results in yesterday issued guidance Investor that is included commentary then release provide from the and of around the updated section

some will prepared Dave Concluding our remarks, closing comments. add

open then for Q&A. lines the will We

that call results. responses or objectives, uncertainties. The could As statements. and certain materially anticipate risks a to multiple actual to strategies, any expectations, these reminder, subject obligation these update Like due trends to future, or which statement differ future questions this or from to revise including forward-looking the are events, those events statements, remarks undertakes or includes we factors concerning to about no company multiple results cause

Forward-Looking and summary of the and these entitled information, For and a to risk additional Statements. press XX-K refer Factors Risk release factors yesterday's please sections our in

and non-GAAP yesterday's The we discuss in measures, income. will non-GAAP certain operating call, this revenue for financial On measures non-GAAP non-GAAP reconciliations release. press are financial including

the turn to I call Dave. over will now

David Foss

remembering and Jack years over friend our organization. Kelly, and wisdom experience the Laura member, all brought of expertise With colleague everyone. in a XX over I'd on served privilege to of cherished invaluable for like had leadership insights, senior working financial she our with on her. roles, you, begin a who decade March morning, call who was unexpectedly to Laura to Thank Board and Vance. by XX. today's Henry Board passed away Good

a known and professional impact. positive her her remarkable to kindness, was achievements, generosity Laura Beyond for making unwavering dedication

condolences deepest this Jake and difficult rest and thoughts out during time. family of go John incredibly to the Our and Laura's

Let's performance. and very to quarter pleased quarterly business growth overall of strong to transition revenue now report our results. We're another

As always, the all into that hard associates those to and the thank our results like I'd for went work for quarter. producing commitment

the For non-GAAP quarter of on the the non-GAAP total third income quarter increased XXXX, Operating increased quarter on X% X% for X% basis. revenue increased by basis. and X% fiscal a increased a for and

core of Turning was again on segment to the segments. We strong Revenue the and quarter our up basis. by business. had X% a in the for X% quarter a non-GAAP increased

revenue Our posting a quarter payments increase in a segment X% basis. very well, increase a this X% on performed and non-GAAP

had revenue and a a X% non-GAAP on quarter quarter solid a basis. complementary businesses, increase We this increase solutions with in also in X% our an

in third ever I sales this As for highlighted press the bookings. quarter release, was our best

During the one takeaways quarter, we institution. a being inked core XX of with multibillion-dollar them competitive

year now we've of multibillion-dollar signed topping year, total full the year's last For X. institutions X

move deals private X existing to to in-house clients cloud signed our we core environment. Additionally,

our in in interest solution Financial contracts Crimes strong seeing new are Defender XX We QX. new with

to contracts new intelligence XX time. module, for real and laundering networks that payments FedNow in signed new Financial we machine the uses for Additionally, Crimes Zelle, Defender and fraud RTP learning money fraud our artificial and detect

new card quarter. success processing see clients processing this to solution, continue with We card XX signing

success pipeline and live our on to in an XX in strong remains continued signings add Banno near with Banno platform Digital XX banking and very have to users over contracts we XX.X high. continuing with it all-time million We now approximately popular our month. Even QX sales users replenish Banno for we're XXX,XXX new business. Our including sales keep QX, per

industry, fiscal our it over the year, look deliver turn for we the solutions, I'll ability toward outstanding that, more solutions service to about our our for businesses. prospects our the of demand success. With and remain for long-term optimistic Greg end As detail we and to our very on

Gregory Adelson

Thank you, Dave.

we Annual offers released over insight recently Strategy years. credit bank the indicated plan results have some This As bank spending priorities opportunities of X survey the our increase and union survey. from CEOs. XXXX Benchmark you into next technology CEOs XX% and to credit that union The of technology survey seen, from concerns, and

largest plan segment, to XX% and those, investments the X% increase between Of XX%.

the Jack they through where investing for investment years. executing X where top over automation, modernization been technology inquired to and our all analytics We were with and The planned X also banking, Henry detection, data next has areas solutions strategy. plan fraud areas invest digital innovative

As previously detection platform. cloud-native clients We Defender in and AI-powered our the announced, queue. fraud we another XX have XXX Financial Crimes implementation now clients recently live launched

prevention we In in March Defender Crimes was fraud by platform market addition, Breakthrough, intelligent the announced the FinTech Financial organization. named independent best an

users Dave platform. than more cloud-native Digital on mentioned banking our earlier Banno we registered that XX.X million have

interest in recently Banno Solution for that banking a businesses. strong medium-sized see to our continue We launched and provides experience modern Business small

clients implementation. we live clients XX in As additional and various had XXX about March of XX, stages of

access Henry Jack intelligence data capabilities. terms to is client's data currently a on of platform. beta in make Data broker data of will we progress with Henry single our are all solutions. of a cloud-native dashboard and continue to innovative eventually the In API-first repository in broker, part Both provide executive analytics, Jack which AI

an To institutions to financial real-time dashboard help are metrics complement at decisions developing on executives data we event throughout the our customize. the with database informed, monitoring dynamic make solution, executive broker they

for much to online offering, and This integrated cloud-native opening account seamless clients. solution. commercial retail we Jack our experience loan loan new deposit them a solution Related processes, better will provide digital our and serve account about opening to and automation technology, haven't spoken automate platform that enables workflows both one is yet clients Henry streamline

the plan our add phase of to plan The beta found early with services clients year clients We to over XXXX. the begin that in years. X also survey payment XX% calendar next

in full well solutions as payment a payment continue our of groups. We application center other pay offer as of our areas to range

the RTP, As represents clients clients had RTP FedNow, real-time we clients network, of XX% using representing final One XXX April. FedNow from what XXX we survey clients our clients. the live payments using They of with Zelle, point Symposium and of consistent heard clients the the Annual on our live late March at which XX, findings. XXX using were XX% Initiative in Strategic

is Strategic the economic a optimism we of in detail institutions Jack spent artificial year framework financial intelligence. tools, about presented lot feeling are Initiative to heard guardrails, ago. One time slowdown and cetera. topic concerned for versus of of deposits We cost is a use While at we there and Symposium general what margins, the training, necessary less about an interest concern year impact a Henry's acceptable building et this of increasing discussing the education,

solutions We enhance process streams. continue opportunities to optimize and aiming AI, actively work client and identify internal to to leverage

solutions client Financial select Data Broker, into of Executive Conversations AI strategy. Banno Incorporating like, Defender, Dashboard and part Crimes that is

thoughtfully, We benefits approaching to associates and and our AI are clients with commitment and it our data deployment aligns ensuring protection security. privacy,

about the simply our initiative Henry. Henry we Jack months responsibly brands Our Jack since ProfitStars go bold strategy retire now Symitar, ensures we and balanced. as banking XX and to corporate market rebranding It's to are as been

brand independent from showed and X brand months. enables institutions results brand points specifically improvement received at brands financial Henry. uniting a well-rounded said us that single, Jack speak that consistent has one a that in We role voice, equity from Henry's regional XX the an provider reflects to financial recently as saw time, Jack we millennials. increased Henry's and As study large significant Jack just by We technology with

having we as And what decisions. already millennials complementary to are financial through financial they execute on because are continue important influence more to and institutions technology solutions buyer today our payment both leadership our strategy to a we critical groups. provide these at larger technology taking innovative is This roles institutions on larger and beyond audience provide and

brand year's innovative how in efforts. been are variety details key through equity, excellent report of report year. Hopefully, report an focus investments all believe wellness the supporting corporate technology financial the sustainability of have we've we Speaking local the that philanthropic XXXX on XX. of working is over seen representation the on both published our accomplishments with communities new and on This and We initiatives March a we you a past

continue focused Work of Newsweek, on group also with people to disabilities disabilities. and our and highlights awareness commitment World Computer received innovation organizations the valuing with to like further launch from some The business We of invisible USA Best also to the Places we recognition new visible associate-led a Today. of report public

roles. years, but Shanon the with part Union changes, XX technology Shanon our credit currently Solutions years close wil organizational Operating do success, unions both Henry Officer, of visionary effective Jack so we working company's X. promotion lcontinue of to July Operating with Chief of Mclachlan our to As Chief been and recently X and Credit Jack operational contributed Officer. is for planned is next strategic Henry and a who has who to President leader senior to overall announced the banks has as Shanon has significantly and

unwavering to outstanding recognizing by for acquisitions. Jack and role He our on thank focus Mimi for has and into guidance. I the through on exceptional Dave's as honored associates, also turn past mentorship organically growth, for and close he the as that, prepared numbers. done me to an CEO leadership, well details continue has our shareholders. With has X, to Under experienced CEO the Dave I I want I more to Henry years. Dave with strategic leading over step it X on will his job over the both want company and July clients I'm

Mimi Carsley

Thank you, Greg, and good morning.

on strong of increased of to reflecting down $X.X with of at million week, the and financial shareholder institution our fiscal and approximately than $XXX,XXX, year-to-date a regional $X.X earnings a delivering us million, focus led quarter performance a prior GAAP I'll revenue and another track driving financial serving X% our X% third clients. increased X%. our non-GAAP non-GAAP million, period. last revenue our full with the revenue which then growth. XXXX. on continued deconversion Deconversion of stronger and consistently keeping X%, is on and start less minimal consolidation we for Year-to-date growth basis $X.X clients, on solid and was was approximately solid quarter Year-to-date Our year update. QX results, revenue GAAP continuation details conclude guidance revenue institution community value pre-released

Now basis. non-GAAP for increase let's services in X% support a hosting at growth closely non-GAAP while GAAP data increases details. GAAP Year-to-date, was X%. the increased and revenue the result increased on and robust revenues. quarter support and a of X% and look the more processing Service more was the X%, during

long cloud for the been and a XX% to quarter double-digit reoccurring in has of private in robust contributor total We the our offerings, continue to year-to-date. and experience which engine. is key public growth revenue increased This growth XX% our again and revenue

results, to basis both X% component processing GAAP of and other delivered which our card revenue X% for exceeded growth recent to revenue, positive XX% another total both. growth drivers model. like processing revenues. In We and I total revenue saw for a performance with and is non-GAAP demand on Shifting key long-term XX%. processing our processing, commentary, digital recurring would Consistent solutions, payment of highlight quarter out revenue for the and other include year-to-date with positive closing

and Next, cost a expenses. which the non-GAAP non-GAAP for both quarter GAAP increased for X% Beginning X% GAAP X% to versus year-to-date. basis moving on revenue, of with for and

and the fees. related revenue, personnel costs higher costs direct with consistent increases in license increased Drivers and included higher for internal quarter

and increase costs net R&D X% due both basis The cloud consumption to for capitalization. Next, GAAP a primarily of increased the on is non-GAAP quarter.

to a a related X% The onetime-related prior We on $X.X year-to-date, $XX.X lastly, did, a basis, incentive in GAAP voluntary rose X% SG&A basis. primarily are on SG&A million basis program. GAAP GAAP GAAP the costs. in early non-GAAP increased XX% differences due on a higher quarter non-GAAP the and for period, non-GAAP. And sales. and X% for departure million a the personnel X% the and and basis, gain on R&D For Year-to-date expense on QX, increased basis on to primary costs, X% asset

higher we're which the generating on gain margin, personnel compounding Non-GAAP delivered of the remain non-GAAP, focused and benefited XX points on retaining positive basis quarterly produced earnings the quarter absence results board X process These difference share disciplined per of non-GAAP expansion workforce, see talent. fully assets. We from segments, across performance. margin results is and GAAP pleased a while focused costs up X%. Separating primarily to XX.X%. was into our $X.XX, management For margin improvements of strong and of due results diluted to sale the operating of increased key the

operating for margins basis, the with a X% segment basis XXX increased non-GAAP increasing quarter revenue non-GAAP Our core on points.

trends We benefit from strong control. to and private continue cloud cost

reflects fees. moderate points beneficial solution quarterly direct with complementary headwinds from growth overall focused with non-GAAP at the cost XX business, expansion. consumer Payments impacted due basis segment, basis increased margin XXX of spending quarter non-GAAP a non-GAAP increased growth with basis continuing revenue expansion. Year-to-date, card XXX and increased consistent of basis points. The operating license And Segment XX X% points. trends impressive costs expansion. U.S. margins and basis. comp also the margin tough to X% of revenue had margin associated product digital on and non-GAAP This slightly demand X% was segment segment Growth finally, increased by matched with year-to-date margin basis growth XXX non-GAAP and to Year-to-date, and growth X% X% of the a in and EPS management. Year-to-date, revenue moderate our non-GAAP revenue support points combined were margin growth revenue points was mix.

Let's flow review now was prior million, million of capital allocation. Year-to-date cash to and a turn increase period. cash flow $XXX $XXX operating over

year. from proceeds $XXX was significantly free of million the last the Excluding sale more million, cash flow than $XX assets,

included Section XXX case on payments an impact. of the year Our cash entering level tax base the elevated based

meaningfully on outlook equating cash taxes was $XX efforts, lessen well as result overpayment clarity an legislative cash improved tax to million we impact. year approximately as net year. to fiscal The and Based internal able were this fiscal last lower the

capital return creation consistent of a Our value on in to shareholder's trailing dedication XX%. resulted invested XX-month

year-to-date $XX conclusion changes. With including reduction fiscal in debt and of year complete, guidance dividends. the million million return on and metrics annual offsetting in Additionally, in of for I the quarters capital I'll dilution, notable $XX repurchase, share conclude period, million other our highlight would $XXX year, we're with therefore, the nearing X

GAAP yesterday's aware, to guidance year with updated release press a XXXX included you're non-GAAP full reconciliation As along fiscal metrics.

approach described filed on we guidance. a August we're an reminder, X X-K for starting year, a using the As revised fiscal that in how current deconversion

million. third reported deconversion we approximately we year of full quarter $XXX,XXX, deconversion $XX reiterating of revenue While our are guidance

non-GAAP X.X growth end growth the reiterating bias towards We potentially of both non-GAAP are revenue to GAAP and have lower X.X and growth range. a to expect our

the we revised updates, Incorporating previous tax results positive points full now increase XX.X%. to XX the The to to for GAAP rate provided. an margin to to full XX and non-GAAP $X.XX on basis at operational to Due year estimate $X.XX of focus expect compared continued expansion basis upward remains in per previously a $X.XX year XX management, guidance the cost XX share. annual from noted $X.XX is EPS to positive share the guidance of points per

strong results Jack expect far and diligent solid thus in-demand deliver and these of solutions, reflected continued for and investors execution continued XX% appreciate reminder, asset of momentum our fiscal we've confidence. has the We deconversion related XX% of payments, We XX%. In deconversion Henry or to the from net sales the and we results fiscal flow on a conclusion, resilience contributions to our GAAP for we this interest, improved remainder execution severance remain strong better exceptionally favorable in year commentary our about for actual the year. guidance anticipated finish QX fiscal than initially conversion tax their dedicated EPS shareholder guidance headwind $X.XX cash the free our and creation. for results value XXXX the cash drove that revenue margins to increased on clients from the year contributions positive the our full and of previous focus costs of compared for did, a As approximate associates XXXX. revenue, ability innovative to Due seen nonrecurring and and gain to

over the Dave Before for I closing call back to turn remarks.

for of had small meaningful of the and and being I with time to of I model for his is so working opportunity role long While guidance many generous past thing. service, so our giving right a as the the and support X others, haven't doing over with years. pieces pleasure amazing Dave leadership for incredibly He for me work want wisdom to Dave as this the together. cherished company I thank

are to forward together. journey I the We have him continued Board, Jack Henry fortunate to this look lead and Dave?

David Foss

Thank you, Mimi.

have this my Reflecting all opportunity Board to marks this to Henry, lead X. grateful on aware, undoubtedly earnings this call you has career As transition Executive Chair Jack me, incredibly before as had my company on And final and at years. been an are past for July CEO journey great my to beyond the both for personally the humbling X I'm professionally.

to service in for all our analysis. know have get team As insightful we your to reputation and financial forward, and the and cherished years our rest the of I strong the well appreciate Greg great and exceptional sustain utmost opportunity over confidence as I've move performance. our thorough the questions of as you to technology

I in for associates. allowing needs. their want I And to each is serve clients up that our to that, dedication and open makes please heartfelt our to the thank you lastly, other our Jack It the special. With would, floor we'll unwavering investors trust commitment clients appreciation express supporting us our for their my and their success for to Henry questions. our line. Alan, this company open and drives if and

Operator

Instructions] [Operator

Mehta Our of Northcoast first from comes question Research. Kartik

Kartik Mehta

and you're revenue for to know, like, the perspective backlog. the based and the on wanted maybe end maybe expecting Mimi, looks and move revenue of predict the end you about on perspective forward, ability how feel guidance. why to sales lower what your the good just on But pipeline maybe we the just your the get use. as said, fiscal of to wrong I a Dave, backlog is I lower as maybe you 'XX, non-GAAP word

David Foss

to my I'll I'll then perspective, ask give comment. you Mimi and So

-- sales release in that was quarter the quarter And almost replenished -- it best the a that the same So the third sales pipeline best at that fact first has quarter we've to that record had. in also comments and mentioned this we've ever ever my was last I highlighted quarter. off, I been sales level

So feel pipeline, happening see what's in of opportunities about to now, sales our which, course, announce, bullish to that more deliver. I here but we're here not right continue what's in for Henry as the I sales and see future the going the even on as importantly, Jack to I quarter at in really ability we're

say -- to to perspective. I'll So Mimi something. want you that's a sales ask did

Gregory Adelson

Let me just add this.

I this we've highlighted sales that this we've the thing actually selling times, until as many think that the success future year. is become for quarters. other had opportunities part, revenue years and But year, So unbelievable don't the deals we're most future

some always So are are part do. implementation we I of this yes, working an in those and all we're there as things think is, that through queue

But there other is on what that isn't seen. really based hopefully anything than future success signaling we've anything

seeing So sure I future of be that just now want right to all understand you the will sales we're that success in quarters. make

Mimi Carsley

Yes. that the X that thought add, is what business The the factors -- relate would much really still very beginning is to total revenue. a and we economic our is in good our in we Kartik, only operating line about revenue thing of of algorithm long-term at year. I feel all business. segments with that's card about There The part the does

year, we as our think really out for feel I ability to So hit that we about range. look confident the

Kartik Mehta

use maybe and you're is Henry, an opportunities could an to for an Greg, it I'm the that there that so, you cost? implement with cost internally Perfect. effort for and And you if wondering But AI lower about upfront And dealing there. that. is in there just in Jack talked to then, opportunity

Gregory Adelson

great Yes, it's question, Kartik. a

are operational lot is answer internal our on throughout spending time organization. efficiency short opportunities the a So we entire of

each the their of nonoperating leadership we most fact, of and recently had units presented AI corporate all AI. where a individual business utilization ideas for generative team business units meeting and In specifically

couple I actually GitHub -- time, getting all so ways internal the other of other things all through in prioritization. for to a Microsoft a doing the efficiencies the looking on copilot and those as we going stuff we're done the actually job and stuff. efficiency of We've we're And And building of or developers of we're continue codeveloper first effectiveness the process use going that copilot, things first, learnings our of the spending sure really just can we're and within for announced utilizations good as through products some that focused the some that well. We've approved for and making for sorry. build

Mimi Carsley

The I and add only Greg well responsibly bold and the that as said, approach, thing would investment. the both covers balance as as there our usage on is

processes using be business this isn't about the And internal business prioritize, develop just think curiosity. has so and to There we're benefits, to policies the to cases, not cases. to existing -- a

and that of And our so R&D expense budget will still within planned policies. internal sit all and

Operator

Andrew The Citi. next from question comes Schmidt of

Andrew Schmidt

maybe transition. trajectory, start Want as this. a to the were year, point Dave, But there well. -- longer performance above congrats some a you're point margin efficiencies we Good I finer go-forward this maybe again the on you kind as operational term. outlined the think Mimi, finer could here. about know on mix margin the you've on drove put of like this some you for front. what that And that on seems maybe factors it some then that. mentioned

margin inform view does on progression? the performance -- how the year's longer-term kind margin So this of

Mimi Carsley

which amortization for year. is well, we're for thoughtful down Andrew, to bit we're would also very some being came around it this also how strong of timing diligent going So product about around next the mix year, something it's There's well, us say just products a I impacts as as to spending that that operational and around be for headcount, focus, execution, year. but

still early really planning. in our It's budget

thinking that value. but range state, given still Our and to would elevated at we've versus this the about long-term an shareholder we're always getting teams about are trying together prioritization I say thinking point, deliver

be focus always going for that's so a us. And to

Andrew Schmidt

the in just average know up maybe cohorts. to of the then past few maybe And just seeing X adoption of of a or just years, sizes I digging maybe size periods recent but recent into a over a you're Perfect. product year finer put gone the attach contract complementary contract perhaps have what years rates terms average and versus ago. point in terms just

David Foss

Dave. it's Andrew,

whenever one a contracts. our we of conversation no when thing such it have as challenges to is this, the is this like average in comes there So

be lot that The we sell correct. remember, high are solutions and a the with our of core of rates outside core with attach You're But tend our to the variety clients. base solutions from solutions. that we They ticket roughly XXX ticket range price very sell price. hosted. everything the sell Most very solutions we almost today large is small -- different of to

So it's rare licensed of for solution. a us to a sell version

Well, then to attainment or best in used approach going trying hosted the the quota had. X they was are fact QX XX the average be or they're challenging. is to indicator hosted have best about contract just or for years so years because now, QX pretty talk that, I same many we the best ever for is the sales we've mentioned, measurement measure for as years The

the for same most contracts years. we've used of that, the measuring success indicator of the way is That's fact many sales significant

our it's so relative for overall sales are And organization. sales performance And a indicator good up.

I not it's to thing try world. in not to it's So but averages, really a practical to just be our able talk and frustrating do about know

Operator

comes Peller The Darrin Research. Wolfe next of question from

Darrin Peller

If below XX% through off its free a gone cash on and just we strength XX%. could of obviously it above revisit, start just discussion. has Maybe periods

the it maybe forward us now, to back if going back sense just to just XX%-plus. help and what Mimi sustainability saying Now in of you're more are next on couple the a give driving we're XX% little us a the of years? understand factors Maybe

Mimi Carsley

a bit lack Darrin, of a And it due of was part, legislative in coaster has roller ride. a the clarity to front. been from that

XXX we were taxes the that. through, we addressing quarter's progress but Congress optimistic, betting As the hopeful we said last on go on cash impact were R&D-related on on Section would call, not

year from absence our Henry savings that us But team had clarity would Jack here, the tax last a so the has consultants, our mean even paid tax in to outside benefit less being impacted effectively able incredible of -- perspective from discover year. that really tax that have IRS cash to that, a cash the this treasury helped

year. will get think in addressed. earlier And impact it we're over represents an the where so some in $XX I be that legislation fully not even that versus year. biggest if position driver does million improved additional in still hopeful the we year's alone, for that thought last that's But addressed, alone this let We're

free think that's that's . and biggest So impact I to forward the sustainable go [ ] the the for flow, cash

Darrin Peller

side, talk products be maybe about on or obviously, could more weaker? more Greg, core inflections just offerings I cloud the your anything conversions we've you're specifically seeing specific color demand just you're mean time seeing maybe Any versa for for we now. in for that's if what any discussion just around some had great. market, the would or or vice

Gregory Adelson

Yes, sure.

big clients, driver. those be. big efficiency we're really of market why on already part obviously we're to pickup a some all continues be products those. of deposit I and highlighted think Operational we're driving already nice see to survey some focused even our fraud and the So things we as continues to in regular that being and a continuing key of our couple focused one, things a with of that in and just on, out And with set our conferences that's growth conversations and

So those continue be to big ones.

Dashboard. tech and calls. Data to Executive But to about with of continue think lot continuing I talk we're and related in future right our execution the to with we're We'll Broker the done a excited modules. success that. really have we've about more side of what on now, modernization that what doing We're

advancement utilization not show what the and cloud-native technology the some really We and of we're think we'll an there generative AI are that that. for space doing products us in those today of part are to out as continue in our opportunity to create of

big those what of opportunities, operational around things. deposits, tie the has kind all will fraud in demand as X efficiency So the been of to

Operator

from question next comes KBW. Vasu Our of Govil

Vasundhara Govil

not Mimi. one you're talk up could segment, just seems it's relative revenue that then accelerating had that reason I first go-forward 'XX you have year, than would on maybe new how early if performed be to payment sales if based specifically the to for know the think for momentum guess Any internal a this too we quick little it not setting softer for you've there. comment I year. case? And the the also stable, slightly about next on into to the it but like would growth just expecting you're trending trend what and thought, expectations outlook,

Mimi Carsley

tell a expectation no budget things the growth could We're level. success I with even wish too having the though there's that during but that each it's I this lower than from are impacted process. other there's year. reason pipeline with tremendous Vasu, present a There more little merge years next the convert a we're to But early. the that precision So sales high targets, challenges just algorithm perspective at any you some have still grow-over year

know You perspective. think to for just I next year. think algorithm about grow-over is growth from never framework pretty the But a a good

algorithm As say And it this was line categorize and debit. to broadly relates that, comfortable trends major card at payments year the reiterating that to the an full we appropriate a seen and and is feel the to U.S. growth that we all slower of really we're question, would we've with tough growth, and X% transaction level. that in I network X% year in slower growth saw -- providers comp, guide, it, still in but

Vasundhara Govil

big certainly to you. of was One going high-level you with today for years ago. than you that few I industry, after the then, fintechs majority few will last is larger Dave, the the players of but working the in enjoyed probably really years, missed. want X it are share number the opportunity have question and And the be that add, a I've

to see X X years? So the over evolving next how landscape the do you competitive

David Foss

Yes.

you, Vasu. thank It's been off, first So fun.

it's from and been has competing view us while point into the People to to view. banking it froma provide them on services of they interesting. the as quite now. like a trying players a U.S. And for of opposed come So point market is going many for technology approach of challenge

but work see. the user really be something how that thinking, that don't hey, can come I you the be a that and don't but that's fun, the scenes they And need has heavy that's it's realize bank it work in s***, successful. so to the to more they difficult to is behind that greater done It's a for not lifting deliver experience, do cooler

lifting And away we've environment, And really or trying something understand a deliver understand kind turn the solution, heavy regulatory come a U.S. digital their into into solution market all happens seen that. that they the banking many don't solution then of to maybe back underneath. the like so don't and

And today I on that. different don't going is view any so from really what's

to keep those bank and of you or There credit operating all I and are they're important balance to the complexity people, often people things smart there, in the a do think but all times and union things have out is overlooked.

to it's were do my threat, we isn't in where we to than open, pretending really how a today our ago lot that out a mind of we a people X follow wide industry, people But lot all lot eyes were and just difficult in nobody of really is a So a really and foothold we're different do. talking, and not things have was figure the this different years of any trying to companies. it take

see soon. So anytime that I changing don't

Operator

from comes question Tyler next of DuPont Bank The America. of

Tyler DuPont

This needle are where of Any to the just wanted core. be that is end right, complementary set Jason. the of rolling out If sort remember on was in progress clarity some the think the today this I solutions, you moving the when Crimes for level rollout. implementation Tyler maybe F you the might 'XX outside as going by of business, forward? target Defender, of and Financial sort Can some there? with about by such asking I start just we

Gregory Adelson

is Yes. Greg. This

I'll that one. So take

being start end this So fourth forward. able year the about second be we'll sell at of and 'XX. talked year -- 'XX calendar to year, will it as the or we're the of and planned able moving as to our in implementation doing quarter QX. quarter year execution, had fiscal be -- calendar in We of far that second Execution

be planned will That the implementations.

through take to very going a We're earlier, on now. a fashion going competitive of As were in focused handful strategic one just after this we mentioned working right we course.

level to of do to some as You we're have well. get cooperation doing of some what

documentation you need. kind that So some of some the idiosyncrasies working those of kind gets in what of that through and of

go that Financial plan of and is track X on outside far our Crimes CPS Defender, today as But product card not as to do have Banno all our that products business, those Henry we'll the and Jack core the the we're available then things. be base targeting first to all offer that same at other the through and of core time specific be working

the while So And with particular that happen. think some -- significant it to question it doing selling but of with reality and solutions impact, products have a other is other the in we're for when help of any will we as other far as us will stickiness those things your answering what little will be opportunities.

David Foss

sure offer just on we're same your page make here. I to clarification the Can just to question, one Tyler,

talked solutions we're So have to solutions about -- Henry has customers. the we rolling that other outside thousands into base. But of these and the brand-new of what is non-Jack thousands core Greg deployments

base banks running more have years, to not think and sure make credit are confusion that's core been Henry Jack customers, thousands solutions. So more bill are I the for core no than Henry customers selling customers, just other are in there's many Jack of number unions solution who and fact, a about for we've true who our core we want pay I outside -- of

fact talking want So sell been of outside make I about it's we've kind know thoughtful just really brand that and the base. the that we sure to the solutions new clear just we're these around to about. how strategy on

Tyler DuPont

you just field, any little update past will, mid-market of trends jump different there there? different if signs of institutions quarters, seeing a that couple the into any any a Okay. clarity you're of I appreciate several there, financial there's angle. of a to off success there. Can follow-up, trends more And seeing you're then you've wanted the the bit discuss Understood. competitive slightly question, from seen as or previous moving with but a I positioning any I signings mentioned implement? playing was over you just multibillion-dollar if sort what you the know but to need you that go-to-market

Gregory Adelson

is again. Greg Sure. Yes. This

take I'll So that.

to as previously, continue the call But opportunities continue $XX let's $X would space, multibillion opportunities to we billion just and all continuing in work and we that our there. in in X make mentioned it billion-plus queue, more those. more the and we're pipeline, those the current to $XX progress to say So still we've they're even I on and billion in see have

have And can on that I what would see some say sales want not continue done, the modernization And executed we've biggest the it's And level people going. things line. drivers to are already we really a importantly, of technology are most what advancements as It's articulated show for folks we've imagine, you seeing we're and execution, more future. and strategy along pitch. we just what that on to where the that

sales and really many has the that opportunities. these helped pipeline progress us in larger So of move with to continue

is been think going side, I on So you're what the those continue always we're doing what create we've to to technology side, to see the from opportunities. continue known service what

Operator

next Dave comes from question Baird. The Koning of

David Koning

wasn't then the I normal coming revenue Great Dave. -- think corporate usual. lower And than What's of just was X kind do guess, quarters? back the there? go just down costs as cost dynamic those conference than higher of career. recently, First in kind in And the Congrats, Corporate I or I quarter, guess, of but questions. were cleanup the all,

Mimi Carsley

Yes.

annual QX. I is one hit did have relative we quarter. think quarter, I just to wouldn't talked about increase read We -- last a like anything in merit into that the

up. where quarter was not a you much mentioned that. you revenue read the just too from it hardware be So The would saw could but that's I into or conference, last perspective, cost cost as personnel go

David Koning

Okay.

And Okay. one. then other one

of seen term I actually small was you just describe quarter had a that fee don't just fee if and EBIT on a a And had Both know then I term small anyway, dynamics how such I those, loss think term maybe And negative you know one-off. in think if I that's those. but of complementary. -- either fees. those before of ever kind it happens you've

Mimi Carsley

Yes. This is certainly a one-off.

once know, of file transfer a we as you they process. little for the do bit notice get So start deconversions,

institution delay. deconvert that we So then timing to planned financial postpone were and later informed and had the a

that was And bit a of a transaction. there on so reversal

David Foss

I to don't this And come this -- I recruited time. they a back and the and been away this, last to conversion saw was decided essentially Dave long back a so that a out competitor, this failed is of Jack customer had they that time remember doing mean, needed Henry. a that was by I something I've but and

our conversion So certainly many, in for that I don't many a remember failed industry ever and happening haven't seen years.

a was situation. this So real unique

Operator

from Stanley. Faucette comes Morgan next of James question Our

James Faucette

he going on Greg to their And to liquidity be Henry get in for over CRE thoughts of to scrutiny picking quarters. on my capital regulatory to put take dig several want Great. being the I thanks hard Jack and and alluded on your to little and all of have about Wanted several of bit through adjust the customer here seems sentiment. the right also I'd love plans which Dave to maybe in that the are years. next now, concentrations as extend your the commentary Dave behalf a banks banks has up, advantage over quickly to

be and customers those the help performance, seem if can to thinking with you your greater but customers topic how scrutiny about of that. impacting and bookings is doesn't sales to what That regulatory with curious deal you're they do up as coming

David Foss

So scrutiny what the happening was the pretty banking conversation regulatory side. banking since consternation I absolutely of these regularly regulatory Since May greater regional like there of the the year, this -- all for, in that where dramatically customers around the time, our that's environment is days. all very on last in changed think, And has really, was space. period

that of on is had lot not a however, has there's impact so about conversation that. any bookings. And It interesting,

you that things in say credit running technology. a And usually in the something union, almost they're one problem involve need involves day bank is or to risk solve if of how or to you're that. automate you technology or the out any regularly age almost any use and I now have, challenge people to or trying It solution how grow the franchise because doesn't XXXX, either figure to this like mitigate to

regardless regulators that's almost say, us grow whatever of or to for opportunity live mitigate of on to using either of today the is part technology solution, because think some them is. the or the franchise solution, world why, there what's always of or the we going risk with with an is where I so technology fraud to in type it I deal help like And

in did heard seen that survey spending City conference for anything ago, year. tech like discussion about So we was no or increase in in expected Greg just X that about just or cited, client and on a fact, spending technology the I haven't weeks off an coming on any Kansas there backing the

but And want if observations, refer I'll to. Greg, so those would you be to my

Gregory Adelson

No, you complete. pretty I were think

them technology institutions that really do part that products of folks able more here and are that bank an is recognizing that more to the community the to component stay out they're to focused say to why driver in the execution for think need is relevancy I level us especially technology space continue that so is the to would that's be. our be giving above is looking we've to these I the on that. And on "punch" their adamant getting weight, and for they opportunity our been to

James Faucette

implementations? mentioned turn to those for with Just and thinking expansion you from queues. quickly, dealing what And thought delivering there? demand you're the us are broadly? process a resource puts and Greg, How are you versus implementation, walk And speed those up about and trending you're takes current how additional implementation margin it. then the to Got perspective between potential the to through I allocations want

Gregory Adelson

analysis take And unit business Yes, place. absolutely with we financial it's with at those our that of variance we always and question. each truly is reviews our teams, a very it discussions go through detailed a month something look great leaders every and

the And referenced cases. so of kind business Mimi already

may what provide, an standpoint, of business immediate that to a so the we take are the sales add we we at implementation approach kind able of revenue to both on enhancing from along case some helping actually look things to we need pressure what queue, relieve relative And line. where kind value side,

to were we constantly AI actually ways accelerate from be do, a we've to process we're obviously, improvements process the that to some that systemic looking differently. standpoint queues at We're improvements, where that things both we times year questions multiple resources or AI have that also help those. this done just us might about do earlier, can looking of asked able or with general added So at

going question, your but are sides, can both move sense, also forward we're to we constantly people answer we happens. to long to recognize as evaluating we to that queue and make that, continue then as add But makes it sure that

Operator

question of Stephens. next Nabhan Charles Our from comes

Charles Nabhan

It's Dave. to echo best. want the all gratitude great congratulations, you I been just I to want with and everybody's working just you. wish

the your wanted compares standpoint in about follow some and you get I we products how deals to of of customer in consumption in on the the there earlier win ARPU those banks -- an some product and what from of buying, of with made middle as they're market up what smaller the question better just your So base, like to their as of progress as what's some it how a understanding those not helping well. -- relative think should you've what they're larger terms well banks buying,

Gregory Adelson

Yes.

So I'll and take This is go Greg. ahead this.

the What's that around the markets present, payments on I line. what Dave sell. done there X year, described think future, this what won, earlier, so as things So Banno the the typically to our executed helping is Banno what hasn't solutions around I multibillion a we we've any referenced Business, and far think that of along I not the Crimes, but in deals for as only been that significant that alternative Financial specifically the and we've is strategy we've which

So drivers maybe really huge than complementary those see of more to specifically offering be a be what you. help just the specifically because we honest core products and those opportunity even to with continue decisions, core drive in

relationships. same so is, the of about, are go continue to the that will current talked $XX to be some we they ones, The their I've As question the lot in still larger a plus where interest. of billion

tend vendor. a do little More importantly, tend they bit particular to products. buy not everything fewer with buy one to -- They

ones X the I've where start as base the take than ones of that we're we're X that through also Jack and working products be that we especially larger one-off some a of Henry, some we these we're as $XX So of or to dynamics but larger referenced, look of core product seeing two-off outside have those more today. able institutions Henry to larger getting billion and are the Jack from opportunities specifically opportunities

continue products referenced I as we've today drive as Henry things are large to Jack complementary as outside to that base. in So evolution the think before, as continue $XXX we But see of that and payment have you'll billion. institutions we

foreign not us. to So that's

Charles Nabhan

be Great. consolidation And There's announced the I your to bank thoughts the seems a could consolidation. regulatory think get X, bank follow-up, it credit And next deals wanted about general general or handful to on as I space. just and catalyst your that the past as you had in get and a to in been month. just M&A for year alluded wanted you the scrutiny a the like the in thoughts on But of M&A union space.

Gregory Adelson

Yes, another good question.

see So to we continuing are that.

of just the relative think, in when our expected we earnings to the did of side completed. more some that be to where But last -- I credit seen have of on that ago. we've more side, call referenced, than staff the a we've unions As seeing those we those opportunities. on few add that, to even especially Part started months banking timing challenge is the of are we're though

that institutions delayed been but be And competitive those had complete our have of matter. couple able acquired institutions actually -- there by have them institutions we've ability to regulatory for So the -- to a that for -- challenges. other

X cases, and some X in months. So

challenge? that to will be continue So a

in the That happens right them. continuing doing remains to -- completed, things not with see be can the especially with see and timing especially we'll happening seen. But interest some what now, to those challenges I be in election. we're when the what's market But of think with necessarily the

Mimi Carsley

less us in convert add talked that bit million the also about saw people merge revenue. approximately that that, of this convert revenue little We a us year. year-over-year deconversion of we a creates And I from merge. the on in would $X.X QX, just headwind for leaving lower impacts

Gregory Adelson

very, have relevant with when City, interest you are our Kansas I absolutely we is is in at institutions opportunities very the in as well of conversations our their just as last level had will right we one part in that that look continuing with comment what to finalize strategies. just overall M&A

Operator

question Our of James. from comes John next Davis Raymond

John Davis

I'll congrats. in It or going talking Dave, before good capital my echo allocation. conversion And thoughts up. looks hop But quarters, just can flow bought shape. go But on cash here. in sheet you We're Greg in free maybe guys is you back balance couple a about of maybe like stock haven't

just allocation, on broader specifically, maybe So buybacks. more capital thoughts

David Foss

allocation me times capital heard talk about thousand JD. You've the

to defer I'll one. So for that Greg

Gregory Adelson

Well, look has of job know cases buyback. at to I a and use Mimi I continue timing. we done to opportunities presenting And think great

focused of Obviously, we're continuing So to on we're look opportunities that. cash continuing free that. the at to and flow improve

they to the So past. the that opportunities are than in closer were

Mimi Carsley

technology. business investments within time, our own think there first, serve We've open through JD to and where growth. is XX% accelerate always our to we're just our to Yes. to would always investments I on, we And strategy continue can look R&D in been that for some ways but we add clients to, quite about at accelerate

always a So that's prioritization.

down And other then to the substantially. the expecting is pay we're debt

a mindful ratio, in revolver. shifting So reclassification in of next and to, just very purposes, do couple we loan some being for thing debt. call our term well, of of goes of And paying folks the for see anticipate as current down A a a from note May weeks The plan we the quarter one out in here. that you'll that the modeling I to current would

a go lot but pay it to let debt So intend it's not off. common of people we their that current,

John Davis

Banno? Business I early it, innings X I to off like just Great. of pretty about your business is the versus term years, Banno between Business And we're how Greg, then, get where like the see know really you to just it Banno would over call X Okay. mix today, mix longer good start. a you in retail thoughts just but seems love and to that retail. the think next,

Gregory Adelson

is Yes. that understand an continue XX.X is have that there's of want are revenue of users how million think to we -- model that point, is or that all in that a do our that any added commercial add-on is to of mean, they each Business, Well, of institutions you users for basically focus -- so I it's to registered important add utilized application add-on -- Dave then alluded the regardless to, that I we Banno business price not. a whether this registered their the being to to for we your part

can of that business imagine, there's retail small in lot presence you are owners As a a today. hiding

And so this creates the do both. opportunity to

So interest gets has institution application. allocated in all are benefit, business for that kind Banno buying ones that of to users it our active of any Business, versus registered their applied to just

So of built for and great how kind that's we model. us, that's the

we success, continue as business on on a we focused there's see get unions union of this continued and again, as, the huge far side side. more to credit opportunity As more our credit think

we take go institutions up as base, then Jack we the importantly, opportunities market, larger product much a of to think the think even right that have as to lot further able going take maybe some the product ones we're that of support now. been the the of -- today And we more than to that's outside we that. be Henry And are part that I do

John Davis

some just I way the maybe but percentage of on Business, of longer Is Okay. better your it, really X kind it to trying next, adoption the term. maybe success years? XX%, of to think appreciate what over -- XX%, how current rephrase consider Banno let's to about guidepost call X would adopting Just And or adopting you of clarification what the guys kind then banks there, that base is, XX%?

Gregory Adelson

to because XX% just of are focused our a already. XX% it's roughly, the say I'd lot in commercially institutions

fairly of would say So target. north would be I decent XX% a anything

David Foss

be I vote Can XXX%. anymore. here won't for I

Gregory Adelson

that XX% XX% we'll we seen from approach. really where if probably we've today under-promising. XXX%. I believe anywhere the are I'm I get don't on -- to But is today, what reasonable know do based a

Operator

from next Our comes of question William Blair. Kennedy Chris

Cristopher Kennedy

I'll all for echo the Dave. comments

one. last one Just

banking Banno a opportunity, big you commercial follow-up can businesses? opportunities to capture last you of initiative. within and other especially clearly, the a to small business about Just And have But just that initiatives is that some talk question. that

Gregory Adelson

what actually have a it's we from solutions several -- different great call, point-to-point Yes, comment. I that have. of kind And would we

we So about management have a lot. treasury that solution talk we a

continue there's to drive great there. opportunity that So a to

side side small and businesses for continue. on the things that the account we're opening that we We lending have doing

small pay bill pay side things businesses of in a have We bill use that our business well. that application we on a capture we as remote application deposit business the do

we solutions have focuses in of talked of we building about So individual one I this the point-to-point have, that I've that a today, a but focus utilize lot on meetings is and products continue set. SMB we're what and talk we'll we to but only more overarching strategy solution what doing, an cohesive plan not about strategy, existing with to and a do our as

Operator

The next of Evercore. question comes from David Togut

David Togut

on maybe out initiative. final to to last your you is you banks of of that, credit as CEO, a us kind processing your this the big call then with give X along since card And status Dave, continue the asset call that could which perhaps perhaps update offering, go Congratulations, it to is billion important How might than debit important robust card for more to bigger a more the is in smaller be focused? you $XX have that banks credit the the pipe. be FIs, processing it tend

David Foss

of far looking decision going as am do and and as with to what It's is it's credit regarding relationship, you, for are the Yes. all is. where of don't who decision that. about they size consideration they I I think from regardless I that The core independent whoever a all their with strategy, their -- thank process a the I am big are of functionality where item don't Dave. debit there bank. their and with totally

And tried not has decision I narrative if the have business you're that's our competitors think card to whole that as have quarter, in sell past conflated of get been process necessarily the you to that industry in years going true. few some the the a

on provide to business. that win order and in You card great great the to have product service side

of So other. really each divorced they're

as, didn't X on I so the credit sign mention in far at we where the credit script, in did we side, As my customers are but additional quarter.

everybody first is move talking some a us. not at the Jack the slow It's time started processor So But on offer same for credit, I about progress make getting dividend to customers that said Henry when and Dave, are recall, for be the this to at we're looking provide platform. I to time, grower but our there. you'll there continuing into who will credit same the want same credit,

or we never it that a offering we're our was become be an was so significant to in part a But a And very offering. of have complete grower enough, the it today. us, and necessary stream fast expectation position a really for that sure that's going really but we had revenue

have to offer a with agent entity partnership another program. We

And so in but for today, portfolio, big those big our of to not together. ago. that a a you has up that great both piece a years all want think great I we're nice it offering grower, great lived the a with customers position Not but expectation I set

Operator

Ken from Research. The next Autonomous comes of question Suchoski

Kenneth Suchoski

might come I which low slightly I X% year maybe think non-GAAP below I of you fiscal I X.X% range, X%. on end in revenue non-GAAP for puts think XQ the Maybe to that heard towards say the think growth, growth, that revenue growth you full

I'm about is deceleration. be slight that would guess there I a wanted off And point jumping right maybe driving make for fiscal thinking Is anything 'XX. the to that sure So just I that right. year

Mimi Carsley

of Yes, FY our But the this to of at bit Ken, I slower looking I think will as within line the that revenue we out the with business, is X% longer We're nothing saw way that's earlier, the range. still hit 'XX year is to the consumer growth X% card Still, what believe algorithm card, a that that play payments networks seeing. little mentioned we within out. term, resilient. just going that are is growth

continue to see that. We

is having less but more transactional spending and ticket, an us tickets that per impact. bit overall They're of being a

growth we're So card really services. business, risk seeing other positive on monthly

But bit that, wouldn't growth. year playing next just launching for from little the for has say are the a of on it's anything off that concern. way out for So a segments I just point this QX. transactional That's lower that year

Kenneth Suchoski

really a that's No, lot and questions anything revenue momentum is a -- and sounds terms Banno, the there it on sounds think, out just we And Banno I is Crimes to call then quite guess, complementary Okay. bigger got part business I slowdown there's in helpful. of few growth slowdown just the in just a like it there is the Defender, because of I behind mean, that becoming strong. user growth, of

Mimi Carsley

mean for and a we I for those see is great demand portfolio to has a you're solutions. products. would robust to I growth say right call it. of continue digital been engine growth complementary us, No, and

there's slowing numbers are mean I the year we nothing they're line with say the there slowed. for So a from expect it's what wouldn't in and -- year really in strong, segment. and I and out

Operator

back Vance session. question-and-answer conference would closing for turn like any our to the concludes This Sherard over I to remarks.

Vance Sherard

Alan. you, Thank

we The in been historically able join meeting Our to September. has be attending you'll and person, will place in starting Investor take annual Dallas. year, our an are September hope if us Day Day coming to X, moving interested We this the May various But And to event. please Investor forward on team, on will Henry to like I entire produce and whose these express efforts management behalf all Jack attending let me be look our the in know. events. we traveling of Executives associates would results. the investor to appreciation . outstanding weeks, Thursday,

his Thank great you too, and in And as anything of I, this the number. upcoming replay will today. XX-year joining us his to investors CEO. him our provide for like please friendship, would willingness working Dave Alan, for retirement company. Thank behalf on do Finally, while you congratulate requested to constant on

Operator

The conference replay has number for The concluded. presentation. for now today's call XXXXXXX. Thank today's the attending access is XXX-XXX-XXXX you is and code

disconnect. You may now

Jack Henry & Associates (JKHY) 8 May 242024 Q3 Earnings call transcript